Insights

Market Commentary August

The Bank of England cut its growth forecast for the UK from 1.9% to 1.7% for 2017, which is unsurprising given the uncertain economic outlook. The Bank also expect inflation to peak at around 3% later this year. Further evidence of the current economic uncertainty is slowly emerging with sofa retailer DFS noting a significant drop in sales.

The second week of the month saw a sharp sell off as tension between North Korea and the US heightened. This saw the FTSE100 hit an intra-month low of 7,309.96. The index finished the month at 7,430.62 as the Dollar strengthened against Sterling.

Over in America the annual Jackson Hole symposium was held from 24-26 August. The perceived key topics of Quantitative Easing and interest rates were avoided by Fed Chair Janet Yellen with talks mainly centring on financial regulation and free trade. Mario Draghi also made an appearance at the event to discuss the situation in Europe.

The Bank of England cut its growth forecast for the UK from 1.9% to 1.7% for 2017

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31 August 2017

1 month

6 months

12 months

FTSE 100

7,430.62

0.80%

2.30%

9.57%

GBP/USD

1.2887

-2.27%

3.72%

-1.84%

GBP/EUR

1.0834

-2.98%

-7.41%

-8.01%

Brent Crude (US$)

52.38

-0.51%

-7.31%

11.35%

Gold (US$ per oz)

1,321.43

4.10%

5.85%

0.95%

As the situation in Europe improves the Euro continues to strengthen against Sterling. At some airports the exchange rate is nearing 1:1.

Given tensions between the US and North Korea as well as the terror attacks in Barcelona, gold has seen a 4.1% rise through August as investors head for safe havens.

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